GB fossil fuel generation falls to record low in third quarter

Levels of power generated by fossil fuels fell to a record low in the third quarter, as demand remained low over the summer period and as renewable generation continued to rise.

A new report by North East energy market analyst EnAppSys shows that coal and gas-fired power stations produced 26.71 terawatt hours (TWh) in the three months to September 30 – just 41% of Britain’s overall power mix. In contrast, this percentage figure was 60% five years ago and 74% in Q3 2010.

The decrease has been driven primarily by rising levels of renewable generation, falling demand and small increases in levels of electricity generation from nuclear stations. In Q3 2018, wind, biomass and solar plants all produced more electricity than in the corresponding quarter in 2017, with solar generation up 23% on the same period last year.

This evolution towards a cleaner fuel mix saw 90% of UK power generation come from renewables, gas or nuclear sources in Q3 2018. Clean sources – renewables and nuclear – represented more than half (52%) of the overall power mix for the first time in the third quarter of a calendar year.

Gas was once again the dominant fuel source, as it has been for much of the past decade. In Q3 2018 gas-fired plants generated 38.1% of the total amount of electricity while renewables accounted for 27.7%. Almost one quarter (24.3%) came from nuclear plants, 7.4% from imports and just 2.6% from coal plants.

Paul Verrill, director of EnAppSys, said: “Our latest report highlights a shift in how Britain has produced its electricity in recent years. Much of the power that used to be generated by coal plants is now generated from renewable energy sources as the country moves towards a greener future. Of these major renewable sources, only hydro produced less power than coal-fired stations in Q3 2018.

“At the same time, power derived from fossil-fuels has become increasingly clean. Only 6% of fossil-fuelled generation in Q3 2018 was sourced from dirtier coal-fired plants, significantly down from the 60% recorded in Q3 2013. This shows that gas-fired plants continue to play a significant role in the market and will continue to do so for the foreseeable future.”

The EnAppSys report also showed that underlying carbon and fuel commodity prices remained high, with EU ETS carbon prices sitting above €20/tonne of CO2. This is a significant change from historic price levels, which were as low as €5/tonne of CO2 in the summer of 2017. The government introduced a ‘carbon floor’ price to the GB energy market to incentivise low carbon generation but with the EU ETS price rising, GB consumers are now paying close to twice what is paid in continental Europe.

Mr Verrill continued: “These price increases have encouraged operators on the continent to make the switch from coal to gas because it’s more economically viable to generate power from the latter. Potentially carbon costs could keep climbing – a figure of €30/tonne of CO2 has been quoted by some market forecasters – but other analysts see prices dropping back from these levels, particularly if levels of gas-fired generation start to rise.

“With coal out of favour within the GB power market, carbon price rises do not have much impact upon fossil fuel projects except to push the cost of generation up. This makes these schemes less favourable than other projects with low (fixed) fuel costs, such as renewables and nuclear, which will be earning income above levels that would otherwise have been expected. These projects should see a significant boost in the short and medium term.

“The consequence for power consumers is a greater raw cost of any electricity consumed, which should translate into higher household bills.”